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The next frontier for digital payments
Jed Weiss – January 22, 2020
"I took a trip to Ethiopia for personal reasons, and it reinforced my belief in the large global growth opportunity facing many payment companies," says Jed Weiss, portfolio manager of Fidelity® International Growth Fund (FIGFX).
Weiss notes that roughly half of global transactions are still done in cash, and cash accounts for a significant majority of transactions in major parts of Africa.
"Only a few hotels took credit cards, so I needed a money belt everywhere I went," Weiss says.
Partly for this reason, Weiss explains, the fund was invested in Kenya-based Safaricom as of November 30. Weiss notes Safaricom is a major Kenyan telecom company, as well as the operator of the M-PESA cell-phone-based mobile-payments network, with notable market share in Kenya and the potential opportunity to expand into Ethiopia.
This investment fits into a broader global theme Weiss is following: He says the percentage of transactions conducted online and by credit card, debit card, mobile phone, or via person-to-person payment platforms continues to increase internationally.
Accordingly, the fund also owned sizable stakes in US credit-card network providers Visa (V) and Mastercard (MA) at the end of November. He says each had considerable pricing power and, together, still controlled a significant majority of market share for credit and debit card payments globally, excluding China.
Another fund position tied to this theme was PayPal Holdings (PYPL), owner of the popular Venmo app—a person-to-person payment system—and Weiss also held Alibaba (BABA), which owns Ant Financial, an online financial services provider in China.
"I think the opportunity for increased digital payments is so broad that multiple international companies are likely to benefit," he says.
Learn more about this manager and his fund
Jed Weiss is portfolio manager of Fidelity® International Growth Fund, which held securities mentioned in this article on November 30, 2019. As of this date, Safaricom composed 0.45% of fund assets; Visa composed 2.61% of fund assets; Mastercard composed 2.73% of fund assets; PayPal Holdings composed 0.46% of fund assets; and Alibaba composed 1.60% of fund assets.
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